Spreading the Sauce

by Leonard Felson

(page 2 of 2)

“The way we make pizzas is unchanged from 85 years ago, except we now have air conditioning and refrigeration,” says Pepe’s CEO Ken Berry. The ovens, a key component, are “brick-for-brick replicas of the New Haven ones,” cast from the original molds with identical dimensions and thermodynamics, says Berry. “If there’s a difference,” he says, “it’s that we use modern insulation versus the insulation from the 1930s.”

“We got it down to a science,” says Gary Bimonte, one of founder Pepe’s grandchildren, who’s long been involved in the business. “If anything, the oven is even better,” echoes Anthony Rosselli, the eldest grandchild, referring to the latest one in Danbury and the continual process of what he claims are improvements learned with each new store opening.

All of that bolsters the branding of Pepe’s, says David Cadden, a management professor at Quinnipiac University who’s writing a book with his wife, Sandra Lueder, a marketing scholar, on small businesses in the 21st century. “You want to have customers think, when they hear the words ‘Pepe’s Pizza,’ not only about the brick oven, the best pizza in New Haven and now in Connecticut, but also ties to Yale or to family—in short, the whole package of imagery that draws them in and keeps them returning—the entire ambience,” says Cadden.

To appreciate the multiplying of Pepe’s, you need to know some of the family history. Frank Pepe arrived in New Haven in 1909 from a small Italian town off the Amalfi coast, southwest of Naples. He worked at a Wooster Street macaroni maker, where Libby’s Italian Pastry now stands, and later for a bread baker, before opening his own bakery, also on Wooster Street. He delivered bread by cart, but eventually he abandoned the delivery business and let his customers come to him. Soon, he was making a simple breadlike product from his homeland called pizza, or apizza, (pronounced “ah-beets” in his Neapolitan dialect). He and his wife, Filomena Volpi, had two daughters, Elizabeth and Serafina. They both married and together gave their parents seven grandchildren, some of whom continued in the pizza business, while others pursued unrelated interests.

Now those grandchildren are nearing retirement age and the fourth generation, the great-grandchildren, seem even less inclined to go into the family business. One, for example, is pursuing a theater career in New York; another in college wants to go into business, but not the pizza business.

Seven years ago, as the family began talking about the future, crucial questions arose: How would they preserve their grandfather’s legacy and the Pepe’s brand? And how could the business continue to financially support the ever-expanding family? Lots of meetings ensued, not all harmonious, but in the end an expansion plan was hatched, as the only way the business could continue to prosper. “It wasn’t easy,” says Francis Rosselli, another grandchild, who started as a teenager working weekends in the pizzeria with his grandfather. What he referred to as the family’s naturally cautious mindset made the process very difficult.

The first big step came in 2004 when the family sought outside advice, hiring consultants and establishing a development company led by CEO Berry. Berry had 30 years in the restaurant business, both on a corporate level and as a franchisee. Choosing future locations to expand was based on a simple formula: Grow out gradually from New Haven, following the population centers and major arteries, including I-84 and I-95.

Instead of bank financing, funding came from family members and an extended network of close friends, says Berry. Since the expansion began, the company has grown from about 70 employees to 325. Because it is privately held, the company won’t release sales or income numbers, only this from Berry: “We’re very satisfied with the way the expanded units are performing. We’re very fortunate to have customers willing to wait on line at each location.”

After Stamford and possibly, Westerly, R.I., where might another Pepe’s turn up? That’s hard to determine, family members say. One scenario common among small family-run businesses, says Cadden, the Qunnipiac management professor, is to increase value in order to sell to a larger player, much like another former New Haven icon, Lender’s Bagels, did when it sold out to Kraft Foods in 1984. In order to get to that point, Pepe’s could conceivably add more stores across state lines and even create a line of frozen pizzas.

But Berry, who says he receives four or five inquires a week about franchising, insists that the family plans to keep the business a closely held enterprise to be run by professional management. “We have absolutely no intentions of building this company up and then selling it out,” he asserts. “We want to bring the brand to more people, to be a profitable, successful enterprise. Everyone’s in it for the long haul. The family will always be involved; they just may not be the ones making the pizza.”

That suits customers like Jeff Beckley, who, with his sons, Jake, 4, and Ben, 1, were the first customers at the new Pepe’s in Danbury two minutes from his home on that cold day last January. His wife would have been there, too, but they had just had a baby girl a week before. Like some of the others waiting in line, Beckley’s kids represented the fourth generation in his family to be Pepe’s loyalists. Said Beckley, holding his youngest son, “It’s the best pizza I’ve ever had, period.”